Updated
Updated · CNBC · Jun 5
India's Economy Grows 7.8% in Q1 as RBI Lifts Inflation View to 5.1%
Updated
Updated · CNBC · Jun 5

India's Economy Grows 7.8% in Q1 as RBI Lifts Inflation View to 5.1%

3 articles · Updated · CNBC · Jun 5

Summary

  • 7.8% GDP growth in the January-March quarter beat a 7.2% Reuters forecast, matching the prior quarter despite disruptions from the Middle East conflict late in the period.
  • Trade gains helped early in the quarter: India sealed an EU deal and won U.S. tariff cuts from 50% to 18%, later reduced to 10% after the Supreme Court voided Trump's tariffs.
  • The Iran war has since become a major risk, disrupting energy supplies, swelling India's import bill and adding pressure on the rupee amid record foreign investor outflows.
  • 5.1% is now the RBI's inflation forecast for the year ending March 2027, up 50 basis points, while its growth view was cut to 6.6% from 6.9% and policy turned "cautious."
  • Fuel price pass-through in May and possible El Nino-driven crop shortages threaten to push inflation higher even though April inflation remained below the RBI's 4% target.

Insights

Can India's impressive growth withstand the historic oil shock from the Iran war, or is a sharp downturn inevitable?
Will the Iran war's oil shock finally force India to accelerate its transition away from fossil fuels?
Beyond oil prices, how does the Hormuz blockade threaten global food supplies and the stability of emerging economies?